European Commission Ponders Terminal Dues Hike

BRUSSELS - European terminal dues could go up steeply as soon as next month if the European Commission gives final approval to a new set of price proposals.

For the last three years the International Postal Corp., the commercial grouping of public postal operators, has pushed hard to increase terminal dues for European cross-border mail.

Under the current system the postal operator that collects the mail pays the postal operator who delivers it, which forces high-cost countries to subsidize delivery of foreign mail from domestic revenues.

The new system, called REIMS II, proposed a five-year transition period during which postal rates for cross-border mail would slowly increase to 80 percent of the domestic rate of the country that delivers the mail.

The proposal has undergone a number of drafts but the direct marketing industry and other cross-border mailers, notably the publishing industry, remain dissatisfied with the latest version before the European Commission.

The original draft called for a five-year transition period, but IPC argues that since two years have passed without action, the waiting time should be cut to three years, with mail rates rising far more rapidly than originally anticipated.

"Transition periods should be reasonable," said Alastair Tempest, director general for public affairs of the Federation of European Direct Marketing and the industry's chief lobbyist at the EU, said. "Five years are reasonable, three years are not."

Equally vexing, the industry believes, is the draft's failure to give adequate guarantees for quality of service improvements as a quid pro quo for higher rates.

"Foreign mail gets fifth-class treatment or is lost unless you are lucky. Delays are common," Tempest said. "Clearly it would be much better if postal operators were properly remunerated and would deliver the mail on time. Working from that principle we have always said that it is all right to set up a good terminal dues system, but one which is cost based and not rate based.

Tempest noted that the Nordic countries have a similar agreement, but that the are only 70 percent. So why not 70 percent in the EU? "Some countries will see a huge jump in postal rates and not just in letters but parcels and flats as well," Tempest said.

The rate question is complicated and depends on rates charged in various countries. Spain, for example, is cheap and mail from Spain to Germany would increase astronomically as a result. Nor would foreign mailers receive the same discounts as those given to domestic mailers. Size and weight are also factors that could lead to increases of up to 400 percent depending on the size of the envelope.

What makes the situation incendiary, Tempest argued, is that once the EC's anti-competition authorities approve REIMS, postal operators could jack up rates at once.

"Mailings are planned six to nine months in advance of their execution. If prices go up you'll throw all pricing and budget decisions out the window," Tempest said.

While the hike would not affect American catalogers mailing into Europe from the US it would impact those who have warehouses and other facilities here and mail from say the UK into Germany, which many do.

The issue will come up again this summer at the Universal Postal Union's 22nd Congress to be held August 23-26 in Beijing. The UPU meets in Congress every five years and decisions reached there tend to impact the postal business heavily.

The Europeans, Tempest said, will push hard in Beijing to have their version of terminal dues hikes approved worldwide. n